Author: Michael Covel

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My guest today is Martin Bergin, the president and owner of DUNN since 2007. Bergin oversees all mission-critical operations of the firm, including the firm’s research and development efforts as well as the construction and management of the firm’s managed futures portfolios. He joined DUNN in 1997 as Accounting Systems Manager, and was promoted to Vice President and Chief Financial Officer in 2001. Prior to joining DUNN, he was a partner at a Northern Virginia CPA firm where he worked for 10 years managing audit, tax and consulting engagements for clients in the managed futures, banking and defense industries.

The topic is Trend Following.

In this episode of Trend Following Radio we discuss:

• DUNN’s trading strategy
• Modern portfolio and volatility
• Reducing the risk and enhancing returns
• Risk management modification
• The philosophical foundation
• Systematic trend following

Mentions & Resources:

• Martin Bergin
• Warren Buffett
• Ben Stein
• Bill Dunn
• Jim Simons

Listen to this episode:

• Listen to this podcast on iTunes. (Please leave a rating!)
• Listen on Spotify.
• Listen on Stitcher.
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• Download as MP3 by right-clicking here and choosing “save as.”
• Free Video.

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Trend following is counterintuitive. It goes against typical investment orthodoxy.

Trend following is not 5-minute bar trading, Warren Buffett, algo whatever, prediction, forecasting, buy and hold, fundamental analysis, value investing, day trading, HFT, Elliott Wave, candlestick patterns or traditional technical analysis charting bullshit.

Trend following is something different. Very different.

And to start you on the trend following journey consider a compilation of my favorite resources that serve as a first step guide.

Michael Covel Trend Following Resources:

• Trend Following Preface (PDF)
• Michael Covel Interview (PDF)
• Podcast (Listen)
• Michael Covel (Kick Ass or Die)
• Trend Following Research Process

Third Party Trend Following Resources:

• A Century of Evidence on Trend Following Investing (PDF)
• Two Centuries of Trend Following (PDF).
• On the Origins and Nature of Trend Following (WEB)
• Speculation as a Fine Art: Dickson Watts (PDF)
• Memoirs of Extraordinary Popular Delusions by Charles MacKay Volume 1; 1841 (PDF)
• Memoirs of Extraordinary Popular Delusions by Charles MacKay Volume 1; 1852 (PDF)
• Reminiscences of a Stock Operator; 1923 (PDF)
• Efficient Market Theory: When will it die? (PDF)
• Time series momentum (PDF)
• Trend following and the MCM system: An interview with Paul Mulvaney (PDF)
• Historical Performance of Trend Following (PDF)
• The Psychology and Neuroscience of Financial Decision Making (PDF)
• Economics Needs a Scientific Revolution (PDF)
• David Harding Interview I (PDF)
• David Harding Interview II (PDF)
• Financial Market History (PDF)
• The Loser’s Game (PDF)
• Fifty Years in Wall Street (PDF)
• Zero Sum Nature of Markets (PDF)
• PBS Special: Trillion Dollar Bet (VHS)
• Trend Following Risk & Return (PDF)
• David Hsieh & William Fung: Theory and Evidence (PDF)
• A Tail of Two Worlds: Fat Tails and Investing (PDF)
• Too Big to Fail: Long-Term Capital Management (PDF)
• Bet Sizing: Ed Seykota and David Druz (PDF)
• Gibbons Burke on Money Management (PDF)
• Frequency v. Magnitude (PDF)
• Kelly Original Paper March 21, 1956 (PDF)
• Decision-Making (PDF)
• Faith in the Markets (PDF)
• Mini-Contracts (PDF)
• Futures Basics (PDF)
• Trading Math Basics (PDF)
• Turtles in the Wall Street Journal (PDF)
• History of U.S. Bear & Bull Markets Since 1926 (PDF)
• Making Money From Mathematical Models (PDF)
• Run Profits, Cut Losses (PDF)
• Review of Michael Moore’s film on capitalism here.

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My guest today is Larry Hite, a hedge fund manager who is credited as one of the forefathers of system trading. He co-founded Mint Investments in 1981, which by 1990, had become the largest commodity trading advisor in the world in terms of assets under management. After forming a partnership with the Man Group in the same year, he pioneered the principal protected fund concept, leading to a number of successful structured products and financial engineering innovations.

The topic is Trend Following.

In this episode of Trend Following Radio we discuss:

• The goal of making money
• Strategies for investing
• How does trend following work?
• What causes inflation?

Mentions & Resources:

• Larry Hite
• The Rule: How I Beat the Odds in the Markets and in Life and How You Can Too
• Jesse Livermore
• Tom Basso
• Paul Mulvaney
• Paul Tudor Jones
• Merrill Lynch
• Peter Borish
• Shaquille O’Neal

Listen to this episode:

• Listen to this podcast on iTunes. (Please leave a rating!)
• Listen on Spotify.
• Listen on Stitcher.
• Libysn RSS.
• Download as MP3 by right-clicking here and choosing “save as.”
• Free Video.

Jump in!

Two updated resources:

Trend following charts.

Trend following performance.

Ed Seykota: “Win or lose, everybody gets what they want out of the market. Some people seem to like to lose, so they win by losing money.”

An investment warning: If you don’t know how this trend following performance was generated… how much do you really know?

Read disclaimers.

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Please enjoy my monologue Out of Context with Michael Covel on Trend Following Radio.

Listen to this episode:

• Listen to this podcast on iTunes. (Please leave a rating!)
• Listen on Spotify.
• Listen on Stitcher.
• Libysn RSS.
• Download as MP3 by right-clicking here and choosing “save as.”
• Free Video.

Want to learn more Trend Following? Watch my video here.

A recent email exchange with a client:

Client: How is everything? I had a question about choosing a business model… Is it possible to be a home base CTA and manage it virtually?

Covel: What do you mean?

Client: I was reading the “How to become a CTA” article in dropbox. It says you can save huge amounts of money by starting the business out of your home. I was wondering if that is actually realistic…

Covel: Why does the physical location matter?

Client: I don’t think it should matter, and I don’t think people would really care as long as the track record was good and they’re making money. I was just thinking… what if I’m able to raise a 1-2 million in my first year and clients know I’m managing the money at HOME. Just thinking about their reaction and wondering if I would lose credibility. That is more the negative side though, some people may think it’s pretty cool.

Covel: I have a pic of the home Bill Dunn started his firm in. I have visited over the years many CTAs working out of their home.

Client: Awesome Thanks a lot for sharing that with me! That eliminates any insecurity I had.

How can you move forward immediately to Trend Following profits? My books and my Flagship Course and Systems are trusted options by clients in 70+ countries.

Also jump in:

• Trend Following Podcast Guests
• Frequently Asked Questions
• Performance
• Research
• Markets to Trade
• Crisis Times
• Trading Technology
• About Us

Trend Following is for beginners, students and pros in all countries. This is not day trading 5-minute bars, prediction or analyzing fundamentals–it’s Trend Following.